Exploring how we take control of our own consumer experience. Contains irony.

Wednesday, 7 November 2012

Rise Of The Facilitators: Big Society Capital

Last night, at a ResPublica event, I heard Nick O'Donohoe, CEO of Big Society Capital, outline a pragmatic vision for a social investment market in the UK. Critically, BSC's role is not to hand out £600m in cash to well-intentioned social entrepreneurs. Instead, it's focused on creating the capability for deprived communities to identify, manage and finance projects that will have a mainly social impact, but with the expectation of some financial return.

Let's say you want to introduce 'makerspaces' for local people with expertise in operating machinery to invent stuff and make individual items to order. It seems reasonable to believe this could help regenerate some industrial towns. Consider the adventures of Chris Anderson, who recently announced his departure as editor of Wired to run a drone manufacturing business he built as a hobby, as described in his latest book.

How would you make it happen? How would you establish the feasibility of such a project, identify the right equipment, locate an appropriate building, obtain any necessary planning permission and so on?

This takes time and expertise, not to mention seed money. Numerous intermediaries must be available to help entrepreneurs co-ordinate and finance their project locally. It can't be done by Big Society Capital from its offices in Fleet Street. It can't be done by civil servants from Westminster, or even by the local council. This has to be a distributed effort all around the country, leveraging online resources where that makes sense. Such intermediaries - or facilitators - will include social banks, active social investors, professional and other support businesses, as well as platforms that enable funds to flow directly from people with cash to social entrepreneurs. The role of Big Society Capital is to invest in the development of a strong network of these social investment intermediaries.

But maybe we shouldn't be too definitive about what is 'social'. I think this approach will be truly successful when facilitators and entrepreneurs aren't necessarily conscious of the fact that the positive social impact of their activities is far greater than the scale of their financial results. To this end, we should factor into all our corporate and project objectives an obligation to take responsibility for somehow improving the community to which the corporation or project relates. In this way, all businesses would have an overlapping social purpose as well as a financial one.

Similarly, financial services need to support this broader responsibility. Of course it's critical that investors know exactly whether they are donating money, receiving interest payments or getting a share in a company. But if I'm putting £20 directly into any project, my customer experience shouldn't be different depending on whether I'm offered a ticket to a concert, interest at 3% per annum or 2 shares in the project operating company - in fact the same project should be able to offer me all three, seamlessly. That's the sentiment behind efforts to proportionately regulate peer-to-peer finance. All types of enterprise should be able to offer all kinds of instruments over a proportionately regulated digital platform, within an ISA.